Museum Tower Shows Strong Uptick in Sales

Last night, I was leaving downtown shortly before 10 o’clock when I espied Museum Tower and what appeared to be about six of its residents still awake and with their lights on. “Either that tower is still very empty,” I thought, “or the folks who live there turn in early.” So, once again, I combed through the numbers in DCAD.

Back in March, the last time I did this, the numbers looked like this: the approximately 14 units sold (some are combined, so it’s not clear) accounted for 57,806 square feet and were on the tax roll for $24,148,610. Now it appears that 27 units have sold, for a total of 108,208 square feet and $57,343,250 of assessed value. Not too shabby. In about five months, Museum Tower has roughly doubled its numbers.

That’s the good news for the Dallas Police and Fire Pension System and the citizens of Dallas. The bad news is that the building has 442,000 square feet, about 370,000 of which appear to be sellable. So the building, which opened in January 2013, 19 months ago, is only 30 percent full. Or, rather, 30 percent sold, because I count at least six LLC-owned investment units. If you’re the one servicing the debt on this building, those aren’t good numbers.

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Comments

Brett Moore

Paging Glen Hunter. Glen Hunter to the white courtesy phone please.

Texas Investor

DCAD ownership information is only required to be accurate as of January 1 of each year. It often lags behind a bit. You would be much better off looking at the Dallas County Deed Records. http://www.roamdallaspropertyrecords.com It looks like Unit #1102 (4,941 square feet) sold earlier this week.

P. S. It looks like the upper floors are selling for a tad undee $600 per square foot. If the remaining 260,000 square feet sell for this much, that would be another $156MM in sales proceeds for guesstimated total proceeds of $213MM ($156MM + $57MM.). Subtract $15MM for real estate commissions and title policies, ignore all the other closing costs and you’re at around $198MM net.

News reports dating back to 2010 refer to this as a $200MM project although due to inflation it must have cost substantially more. This means at best this project was break-even. In reality, after just considering carrying costs and expenses like property taxes ($5MM/year), property management fees, assessment management fees, interest, marketing fees, etc. this will end up being a HUGE money pit.

It just makes you sick when you realize what would have happened to that same $200MM allocated to a boring balanced stock/bond index fund like any PRUDENT investor would have done. 11.3% annualized would have put the Fund AT LEAST $80MM with no operating expenses and much less risk.

And based on the their track record, we can only speculate how much the actual construction and carrying costs will really be.

Tim Rogers

Thank you, Texas Investor. Wouldn’t it also be safe to assume that the $600/ft rate would not apply to lower floors? So that part of your calculation is generous.

Janet

What about the cost to fix the sun glare problem?

Dubious Brother

Who was it that owned the property management company?

Wylie H Dallas

This is good info. Thanks.

Texas Investor

Exactly. Very generous. The last sale on a lower
floor appears to be from 11/2013 on the 5th floor
$525 per square foot.

Does ANYONE know the current book value (or
the actual construction and development costs)
of this project. All I could find in 2 hours of
digging is the $200MM figure, but that
has remained unchanged since at least 2008.
There just has to be something more current.

Wylie H Dallas

I remember the Wall Street Journal mentioning years ago that the developer had approached and been turned down by every single capital source in the U.S. prior to selling the entire project to the Fund.

Wylie H Dallas

Any update on sales activity at the other Dallas Police & Fire condo project, The Beat Condominiums? Also, has anyone ever done a detailed review of the identities of buyers, purchase prices vs. market, and transfer dates? Also, does anyone know if they are renting units? If they are, how are they determining to whom they rent at that project and the rents charged?

I wonder if there have been any conflicts of interest presented with respect to dealings between the fund, former fund trustees, well-connected city contractors, and/or any DPD command staff? Not sure.

Kmgj

They are def hurting for sales still. I looked at a condo several months ago and received an email last week about price reductions. $400k/unit price reductions specifically.